- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS
REPORT OF INVESTMENT ADVISER
- --------------------------------------------------------------------------------
May 31, 1996
Dear Trust Shareholder:
After posting strong returns during 1995, the fixed income markets have
given back much of their gains in 1996 in response to a strengthening U.S.
economy. Accelerating economic growth has raised concerns about an increased
inflationary environment, which could erode the value of fixed income
investments. The stronger economy also has led some market participants to
consider the possibility that the Federal Reserve may increase interest rates to
thwart inflation threats after three interest rate reductions over the past
twelve months.
Despite the pick-up in economic growth, we believe that current inflationary
fears will subside. Commodity prices have risen but manufacturers will have
difficulty passing along the increased costs of raw materials to consumers,
whose debt levels as a percentage of disposable income are at the highest point
since the recessionary highs of 1990. We believe that the overleveraged consumer
will have to retrench, restricting future economic expansion and creating a
positive environment for bonds in the latter half of this year.
The following semi-annual report provides detailed market commentary and a
review of portfolio management activity. We believe that BlackRock's duration
controlled management style and risk management capabilities will allow each
of our Trusts to achieve its long-term investment objective.
We look forward to maintaining your respect and confidence and to serving
your financial needs in the coming years.
Sincerely,
Laurence D. Fink Ralph L. Schlosstein
Chairman President
1
<PAGE>
May 31, 1996
Dear Shareholder:
We are pleased to present the semi-annual report for The BlackRock
Investment Quality Municipal Trust Inc. ("the Trust") for the six months ended
April 30, 1996. We would like to take this opportunity to review the Trust's
stock price and net asset value (NAV) performance, summarize market developments
and discuss recent portfolio management activity.
The Trust is a diversified, actively managed closed-end bond fund whose
shares are traded on the New York Stock Exchange under the symbol "BKN". The
Trust's investment objective is to provide high current income that is exempt
from regular federal income tax consistent with the preservation of capital. The
Trust seeks to achieve this objective by investing in investment grade (rated
"AAA" to "BBB" by a major rating agency or of equivalent quality) tax-exempt
general obligation and revenue bonds issued by city, county and state
municipalities throughout the United States.
The table below summarizes the performance of the Trust's stock price and
net asset value over the period:
------------------------------------------------------
4/30/96 10/31/95 Change High Low
- --------------------------------------------------------------------------------
Stock Price $12.25 $12.00 2.08% $13.00 $11.875
- --------------------------------------------------------------------------------
Net Asset Value (NAV) $13.92 $14.18 (1.83%) $14.84 $13.87
- --------------------------------------------------------------------------------
The Fixed Income Markets
The domestic fixed income markets witnessed two profoundly different
environments during the past six months, providing an exciting and challenging
environment in which to manage the Trust. The Treasury market rally of 1995
continued through the middle of February 1996, as market demand for fixed income
securities remained strong due to a combination of moderate economic growth, low
absolute levels of inflation and two reductions of the Fed funds target rate.
The rally halted during mid-February, however, as data indicating accelerating
economic growth, in conjunction with a sharp rise in commodity prices, rekindled
inflationary concerns. Positive news for the economy which may indicate
increased levels of inflation can cause bond yields to rise and prices to fall.
The March 8 release of the February employment report, which showed a
surprisingly strong gain of 705,000 new jobs (subsequently revised downward to
624,000), produced the largest one-day price decline in U.S. bond prices in over
seven years. For the first quarter of 1996, economic growth as measured by GDP
grew 2.8%, which represented a strong rebound from the 0.5% gain posted in the
fourth quarter of 1995.
Municipal bond performance mirrored that of its Treasury counterparts, as
yields declined through early 1996 before rising with the taxable bond market's
reversal in February. Municipals lagged the Treasury market in the fourth
quarter of 1995 for three main reasons: 1) supply increased in response to the
lower interest rate environment; 2) the tremendous performance of the U.S. stock
market may have weakened seasonal demand from municipal bond coupon payments and
redemptions; and 3) the specter of tax reform throughout 1995 increased investor
concerns over the tax-free advantage of municipal income, which could be reduced
by tax reform exempting all investment income from taxation. During the first
quarter of 1996, however, municipals outperformed taxable fixed income
securities as the probability of impending tax reform decreased significantly,
thereby increasing demand from both retail investors and institutions such as
property & casualty insurance companies.
2
<PAGE>
BlackRock believes that municipal bonds have the potential to continue to
outperform Treasury securities for the remainder of 1996. The recent rise in
interest rates has put a substantial new issuance calendar on hold as
municipalities wait for interest rates to come down, creating favorable supply
and demand conditions. Additionally, the decreased probability of significant
tax reform being enacted should continue to attract investors to the municipal
bond market.
The Trust's Portfolio and Investment Strategy
The Trust's portfolio is actively managed to diversify exposure to various
sectors, issuers, revenue sources and security types. BlackRock's investment
strategy emphasizes a relative value approach, which allows the Trust to
capitalize upon changing market conditions by rotating municipal sectors,
credits and coupons.
Additionally, the Trust employs leverage at about 35% of total assets to
enhance its income by borrowing at short term municipal rates and investing the
proceeds in longer maturity issues which have higher yields. The degree to which
the Trust can benefit from its use of leverage may affect its ability to pay
high monthly income. During the first four months of 1996, the steepening of the
municipal yield curve, a result of longer maturity municipal bond yields rising
while shorter maturities did not, widened the yield spread between short and
long municipals and resulted in more profitable leverage for the Trust.
Since the third quarter of 1995, the Trust has been favoring 10- to 20-year
callable premium coupon bonds over par bonds and non-callable alternatives. Due
to their defensive structure, premium bonds characteristically outperform par
bonds in a rising interest rate environment. As anticipated, premium coupon
bonds posted significant outperformance relative to par bonds as rates rose
between February and April. The Trust has maintained its emphasis on higher
credit quality, consistently holding over half of its assets in AAA/AA-rated
bonds. In order to pick up additional yield, the balance of the portfolio has a
concentration in BBB rated bonds, which generally offer a substantial yield
spread over AAA municipals. As the yield advantage of owning BBB bonds narrows,
the Trust expects to scale back its weighting and increase allocation to higher
credit bonds.
The following charts compare the Trust's current and October 31, 1995 asset
composition and credit quality allocations:
Sector Breakdown
---------------------------------------------------------------
Sector April 30, 1996 October 31, 1995
---------------------------------------------------------------
Transportation 18% 15%
---------------------------------------------------------------
City, County & State 12% 16%
---------------------------------------------------------------
Lease Revenue 11% 10%
---------------------------------------------------------------
Pollution Control 11% -
---------------------------------------------------------------
Hospital 9% 8%
---------------------------------------------------------------
Power 8% -
---------------------------------------------------------------
University 7% 7%
---------------------------------------------------------------
Housing 7% 5%
---------------------------------------------------------------
Tax Revenue 5% 1%
---------------------------------------------------------------
Industrial 4% 13%
---------------------------------------------------------------
Water & Sewer 3% -
---------------------------------------------------------------
Miscellanous Revenue 2% 10%
---------------------------------------------------------------
Resource Recovery 2% 4%
---------------------------------------------------------------
Utility 1% 11%
---------------------------------------------------------------
3
<PAGE>
-----------------------------------------------------------------
Standard & Poor's/Moody's
Credit Rating April 30, 1996 October 31, 1995
-----------------------------------------------------------------
AAA/Aaa 4% 53%
-----------------------------------------------------------------
AA/Aa 5% 5%
-----------------------------------------------------------------
A/A 15% 11%
-----------------------------------------------------------------
BBB/Baa 31% 31%
-----------------------------------------------------------------
We look forward to continuing to manage the Trust to benefit from the
opportunities available to investors in the investment grade municipal market.
We thank you for your investment and continued interest in The BlackRock
Investment Quality Municipal Trust Inc. Please feel free to call our marketing
center at (800) 227-7BFM (7236) if you have any specific questions which were
not addressed in this report.
Sincerely,
Robert Kapito Kevin Klingert
Vice Chairman and Managing Director and
Portfolio Manager Portfolio Manager
BlackRock Financial Management, Inc. BlackRock Financial Management, Inc.
- --------------------------------------------------------------------------------
The BlackRock Investment Quality Municipal Trust Inc.
- --------------------------------------------------------------------------------
Symbol on New York Stock Exchange: BKN
- --------------------------------------------------------------------------------
Initial Offering Date: February 19, 1993
- --------------------------------------------------------------------------------
Closing Stock Price as of 4/30/96: $12.25
- --------------------------------------------------------------------------------
Net Asset Value as of 4/30/96: $13.92
- --------------------------------------------------------------------------------
Yield on Closing Stock Price as of 4/30/96 ($12.25)1: 6.43%
- --------------------------------------------------------------------------------
Current Monthly Distribution per Share2: $0.06563
- --------------------------------------------------------------------------------
Current Annualized Distribution per Share2: $0.7875
- --------------------------------------------------------------------------------
1Yield on Closing Stock Price is calculated by dividing the current annualized
distribution per share by the closing stock price per share.
2The Distribution is not constant and is subject to change.
4
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
The BlackRock Investment Quality Municipal Trust Inc.
Portfolio of Investments
April 30, 1996 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Principal Option
Amount Call Value
Rating* (000) Description Provisions++ (Note 1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LONG-TERM INVESTMENTS-153.7%
California-16.6%
A1 $ 3,800 California Poll. Cntrl. Rec., Fin. Auth. Res., Ser. A, 7.15%, 2/01/11 ........... 2/01 at 103 $ 4,087,052
Baa 3,000 Foothill Eastern Trans. Corridor Agcy., Toll Rd., Ser. A, Zero Coupon, 1/01/07 .. No Opt. Call 1,761,510
AAA 15,460 Los Angeles Cnty. Asset Leasing Corp. Rev., 3.80%+, 12/01/07, AMBAC ............. No Opt. Call 16,096,952
AAA 6,000 Riverside Elec. Rev., 5.00%, 10/01/13, AMBAC .................................... 10/03 at 100 5,415,480
AAA 3,700 Sacramento Util. Dist. Elec. Rev., Ser. B, 6.375%, 8/15/22, MBIA ................ 8/02 at 102 3,823,469
University of California Rev., Research Facs., Ser. B,
A- 2,000 6.10%, 9/01/10 ................................................................ 9/03 at 102 2,008,920
A- 3,305 6.20%, 9/01/11 ................................................................ 9/03 at 102 3,307,975
A- 2,000 6.25%, 9/01/12 ................................................................ 9/03 at 102 2,013,060
------------
38,514,418
------------
Colorado-10.1%
Arapahoe Cnty. Cap. Impvt. Hwy. Rev., Trust Fund, Ser. E,
Baa 3,100 Zero Coupon, 8/31/04 .......................................................... No Opt. Call 1,778,129
Baa 2,000 Zero Coupon, 8/31/07 ..........................................................8/05 at 89.239 923,960
Baa 2,250 6.90%, 8/31/15 ................................................................ 8/05 at 103 2,358,630
Denver City & Cnty. Arpt. Rev.,
Baa 3,000 Ser. C, 6.50%, 11/15/06 ....................................................... 11/02 at 102 3,105,300
Baa 1,120 Ser. C, 6.65%, 11/15/05 ....................................................... 11/02 at 102 1,178,083
Baa 13,790 Ser. D, 7.00%, 11/15/25 ....................................................... 11/01 at 100 14,107,722
------------
23,451,824
------------
District of Columbia-0.8%
AAA 1,900 District of Columbia, G.O., Ser. E, 6.00%, 6/01/09, CAPMAC ...................... 6/03 at 102 1,903,040
------------
Florida-3.4%
AAA 1,780 Florida Hsg. Fin. Agcy. Rev., Sngl. Fam. Mtg., Ser. 1994-A, 6.55%, 7/01/14 ...... 1/05 at 102 1,838,882
BBB 3,400 Florida St. Mid-Bay Bridge Auth. Rev., Ser. A, 6.10%, 10/01/22 .................. 10/03 at 102 3,283,108
AAA 3,000 Sarasota Cnty. Sld. Wst. Sys. Rev., 5.50%, 10/01/16, AMBAC ...................... 10/06 at 102 2,875,050
------------
7,997,040
------------
Georgia-3.7%
AAA 6,000 Georgia Mun. Pwr. & Elec. Auth., Ser. T, 6.50%, 1/01/25, FGIC ................... 1/99 at 100 6,199,980
AA+ 2,250 Georgia St. Hsg. & Fin. Auth. Rev., Sngl. Fam. Mtg., Ser. C, 7.00%, 12/01/15, FHA 12/04 at 102 2,352,083
------------
8,552,063
------------
Illinois-11.7%
AAA 4,000 Berwyn Rev., Macneal Memorial Hosp. Assn. Proj., 6.00%, 6/01/09, AMBAC .......... 6/08 at 100 4,070,520
Chicago Ohare Int'l. Arpt. Rev., MBIA,
AAA 5,600 Ser. A, 5.00%, 1/01/18 ........................................................ 1/04 at 102 4,906,216
AAA 7,000 Ser. C, 6.375%, 1/01/15 ....................................................... 1/05 at 102 7,217,280
Illinois Edl. Facs. Auth. Rev., Loyola Univ., FGIC,
AAA 5,000 4.10%+, 7/01/13 ............................................................... 7/03 at 102 4,787,250
AAA 4,000 5.45%, 7/01/14 ................................................................ 7/03 at 102 3,787,520
BBB- 2,500 Metropolitan Pier & Expo Auth. Hosp., McCormick Place Con., 6.25%, 7/01/17 ...... 7/06 at 102 2,391,700
------------
27,160,486
------------
Indiana-3.9%
Baa2 8,595 Indianapolis Arpt. Auth. Rev., Spl. Facs. Fed. Express Corp. Proj., 7.10%, 1/15/17 7/04 at 102 9,077,437
------------
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Principal Option
Amount Call Value
Rating* (000) Description Provisions++ (Note 1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kentucky-6.2%
AAA $15,000 Kentucky St. Tpke. Auth., Econ. Dev. Road Rev., 3.95%+, 7/01/13, AMBAC .......... 7/03 at 102 $ 14,533,800
------------
Louisiana-9.4%
AAA 14,400 Louisiana Pub. Facs. Auth. Hosp. Rev., Our Lady of the Lake Regl. Med. Ctr.,
4.19%+, 12/01/22, FSA ......................................................... 12/03 at 102 13,546,512
AAA 7,860 Louisiana Stadium & Expo Dist., Ser. B, 6.375%, 7/01/25, FGIC ................... 7/05 at 102 8,203,796
------------
21,750,308
------------
Maryland-6.5%
Aa 9,985 Maryland St. Dept. Hsg. & Comn. Dev. Admin., Sngl. Fam. Prog.,
Ser. 2, 6.55%, 4/01/26 ........................................................ 4/05 at 102 10,193,687
A 5,000 Northeast Waste Disp. Auth. Rev., Sld. Wst., Montgomery Cnty. Res. Rec. Proj.,
Ser. A, 6.30%, 7/01/16 ........................................................ 7/03 at 102 4,953,100
------------
15,146,787
------------
Massachusetts-2.4%
AAA 5,750 University of Lowell Bldg. Auth., Ser. A, 5.625%, 11/01/14, AMBAC ............... 11/05 at 102 5,490,445
------------
Michigan-3.6%
AAA 3,500 Berkley City Sch. Dist., G.O., 5.625%, 1/01/15, FGIC ............................ 1/05 at 101 3,359,930
Baa1 2,840 Dickinson Cnty. Econ. Dev. Corp., Poll. Ctrl. Rev.,
Champion Intl. Corp. Proj., 5.85%, 10/01/18 ................................... 10/03 at 102 2,699,988
AAA 2,200 Wyandotte Elec. Rev., 6.25%, 10/01/17, MBIA ..................................... 10/02 at 102 2,283,028
------------
8,342,946
------------
Missouri-3.3%
Lake Of The Ozarks Comn. Bridge,
NR 2,000 6.25%, 12/01/16 ............................................................... 12/06 at 102 1,882,800
NR 2,000 6.40%, 12/01/25 ............................................................... 12/06 at 102 1,876,580
AA 3,925 Missouri St. Env. Imp. & Energy Res. Auth., Poll. Ctrl. Rev., 5.50%, 12/01/10 ... 12/06 at 101 3,856,980
------------
7,616,360
------------
Nevada-1.6%
AAA 3,750 Washoe Cnty. Arpt. Auth., Arpt. Sys. Impvt. Rev., Ser. B, 5.80%, 7/01/09, MBIA .. 7/03 at 102 3,814,275
------------
New Jersey-7.6%
Baa 1,200 New Jersey Hlth. Care Facs. Fin. Auth. Rev., Englewood Hosp. & Med. Ctr.,
6.70%, 7/01/15 ................................................................ 7/04 at 102 1,210,056
AAA 18,250 New Jersey St. Trans. Sys. Auth. Trust Fund, Ser. A, 5.00%, 6/15/15, MBIA ....... 6/05 at 102 16,432,118
------------
17,642,174
------------
New York-25.9%
New York City, G.O.,
Baa1 8,000 Ser. E, 6.25%, 2/15/07 ........................................................ 2/05 at 101 8,051,440
Baa1 7,100 Ser. B, 6.375%, 8/15/09 ....................................................... 8/05 at 101 7,113,277
Baa1 7,000 Ser. H, 7.20%, 2/01/13 ........................................................ 2/02 at 101.5 7,380,800
Baa1 3,000 Ser. B, 7.25%, 8/15/07 ........................................................ No Opt. Call 3,300,090
New York City Ind. Dev. Agcy. Spec. Fac. Rev., Term. One Group Assoc. Proj.,
A 4,000 6.00%, 1/01/07 ................................................................ 1/04 at 102 4,062,000
A 20,535 6.00%, 1/01/15 ................................................................ 1/04 at 102 19,902,316
Baa1 3,000 New York St. Dorm. Auth. Rev., St. Univ. Edl. Facs., Ser. B, 6.10%, 5/15/09 ..... 5/04 at 102 2,979,090
Baa 1,955 New York St. Hsg. Fin. Agcy. Rev., Hlth. Facs. of New York City,
Ser. A, 6.375%, 11/01/04 ...................................................... No Opt. Call 2,007,492
AAA 5,000 New York St. Med. Care Facs. Rev., New York Hosp., Ser. A, 6.60%, 2/15/09, AMBAC. 2/05 at 102 5,453,800
------------
60,250,305
------------
North Carolina-3.3%
North Carolina Eastn. Mun. Pwr. Agcy. Rev., Ser. B,
A 2,200 6.00%, 1/01/22 ................................................................ No Opt. Call 2,116,268
AAA 5,000 7.00%, 1/01/08, CAPMAC ........................................................ No Opt. Call 5,627,950
------------
7,744,218
------------
Ohio-1.3%
Aa3 3,000 Ohio St. Wtr. Dev. Auth., Sld. Wst. Disps., North Star BHP Steel Cargill,
6.30%, 9/01/20 ................................................................ 9/05 at 102 3,038,280
------------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Principal Option
Amount Call Value
Rating* (000) Description Provisions++ (Note 1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pennsylvania-6.7%
AAA $ 3,000 Exeter Twsp. Auth. Swr. Rev., Berks Cnty., 6.20%, 7/15/22, MBIA ................. 7/02 at 100 $ 3,038,970
AAA 2,200 Harrisburg Auth. Wtr. Dist., 5.875%, 6/18/15, FGIC .............................. 7/03 at 102 2,170,124
AAA 10,100 Lehigh Cnty. Gen. Purpose Auth. Rev., St. Lukes Hosp. Bethlehem Proj.,
4.00%+, 11/15/13, AMBAC ....................................................... 11/03 at 102 9,491,576
AA+ 1,000 Pennsylvania Hsg. Fin. Auth. Sngl. Fam. Mtg., 6.20%, 10/01/14 ................... 10/05 at 102 1,001,480
------------
15,702,150
------------
Rhode Island-1.7%
AA+ 3,845 Rhode Island Hsg. & Mtg. Fin., Homeownership Oppty., Ser. 15-B, 6.75%, 10/01/17 . 4/04 at 102 3,969,809
------------
South Carolina-0.8%
A2 2,000 Darlington Cnty. Indl. Dev., Sonoco Prods. Co. Proj., 6.00%, 4/01/26 ............ 4/06 at 102 1,922,320
------------
Tennessee-3.7%
A- 8,500 Maury Cnty. Ind. Dev. Brd. Poll. Ctrl. Rev., Saturn Corp. Proj., 6.50%, 9/01/24 . 9/04 at 102 8,709,270
------------
Texas-6.9%
A2 4,000 Brazos River Auth. Rev., Coll-Houston Light & Pwr. Co. Proj.,
Ser. A, 7.875%, 11/01/18 ...................................................... 11/96 at 102 4,136,280
Aa 6,000 Harris Cnty., 5.00%, 10/01/17 ................................................... 10/05 at 100 5,393,580
AAA 4,000 Harris Cnty. Toll Rd. Senior Lien, 5.00%, 8/15/16, FGIC ......................... 8/04 at 102 3,546,080
AAA 1,335 Laredo, Ref., 5.25%, 2/15/13 .................................................... 2/06 at 100 1,275,512
AAA 1,800 Tarrant Cnty. Hlth. Facs. Sys., Harris Methodist Hlth. Sys.,
5.125%, 9/01/12, AMBAC ........................................................ 9/06 at 102 1,663,308
------------
16,014,760
------------
Virginia-4.5%
A 3,500 Braxton Cnty. Sld. Wst. Auth., Weyerhaeuser Co. Proj., 6.50%, 4/01/25 ........... 4/05 at 102 3,551,135
AAA 7,640 Upper Occoquan Swr. Auth., 5.00%, 7/01/15, MBIA ................................. 7/06 at 102 6,920,159
------------
10,471,294
------------
Washington-3.1%
AAA 7,000 Washington St. Pub. Pwr. Supply Sys. Rev., Nuclear Proj. No. 1, Ser. A,
6.25%, 7/01/17, MBIA .......................................................... 7/02 at 102 7,156,520
------------
Wyoming-5.0%
Baa2 11,255 Sweetwater Cnty. Sld. Wst. Disp. Rev., FMC Corp. Proj., Ser. A, 7.00%, 6/01/24 .. 6/04 at 102 11,620,562
------------
Total Long-Term Investments (cost $357,147,409) 357,592,891
------------
SHORT-TERM INVESTMENTS**-0.5%
Connecticut-0.1%
A1+ 200 Connecticut St. Dev. Auth. Poll. Ctrl. Rev., Western Mass. Elec. Co., Ser. A,
3.95%, 5/03/96, FRDD .......................................................... 200,000
------------
Mississipi-0.1%
P1 200 Jackson Cnty. Poll. Ctrl., 4.00%, 5/03/96, FRDD ................................. 200,000
------------
New York-0.3%
A1+ 700 New York City, G.O., Ser. B, 4.20%, 5/03/96, FGIC, FRDD ......................... 700,000
------------
Total Short-Term Investments (cost $1,100,000) .................................. 1,100,000
------------
Total Investments-154.2% (cost $358,247,409) .................................... 358,692,891
Other assets in excess of liabilities-1.70% ..................................... 3,915,208
Liquidation value of preferred stock-(55.90)% ................................... (130,000,000)
------------
Net Assets Applicable to Common Shareholders-100% ............................... $232,608,099
============
<FN>
- ------------
* Rating: Using the higher of Standard & Poor's, Moody's or Fitch's rating.
** For purposes of amortized cost valuation, the maturity date of these
instruments is considered to be the earlier of the next date on which the
security can be redeemed at par or the next date on which the rate of
interest is adjusted.
+ These bonds contain embedded caps. See glossary for definition.
++ Option call provisions: date (month/year) and prices of the earliest call or
redemption. There may be other call provisions at varying prices at later
dates.
</FN>
</TABLE>
<TABLE>
- ------------------------------------------------------------------------------------------------------
THE FOLLOWING ABBREVIATIONS ARE USED IN PORTFOLIO DESCRIPTIONS:
<S> <C> <C> <C>
AMBAC - American Municipal Bond Assurance Corporation FSA - Financial Security Assurance
CAPMAC - Capital Markets Assurance Corporation FRDD - Floating Rate Daily Demand**
FHA - Federal Housing Administration G.O. - General Obligation Bond
FGIC - Financial Guaranty Insurance Company MBIA - Municipal Bond Insurance Association
- ------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
(Left column)
- --------------------------------------------------------------------------------
The BlackRock Investment
Quality Municipal Trust Inc.
Statement of Assets and Liabilities
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Assets
Investments, at value
(cost $358,247,409) (Note 1) ................................. $358,692,891
Cash ........................................................... 58,884
Receivable for investments sold ................................ 18,185,428
Interest receivable ............................................ 6,388,267
Deferred organization expenses and other assets ................ 54,266
------------
383,379,736
------------
Liabilities
Payable for investments purchased .............................. 19,924,643
Dividends payable-common stock ................................. 254,770
Dividends payable-preferred stock .............................. 219,700
Advisory fee payable (Note 2) .................................. 104,820
Administration fee payable (Note 2) ............................ 44,907
Other accrued expenses ......................................... 222,797
------------
20,771,637
------------
Net Investment Assets .......................................... $362,608,099
============
Net investment assets were comprised of:
Common stock:
Par value (Note 4) ......................................... $ 167,071
Paid-in capital in excess of par ........................... 232,077,765
Preferred stock (Note 4) ..................................... 130,000,000
------------
362,244,836
Undistributed net investment income .......................... 344,652
Accumulated net realized loss ................................ (426,871)
Net unrealized appreciation .................................. 445,482
------------
Net investment assets, April 30, 1996 ........................ $362,608,099
============
Net assets applicable to common
shareholders ............................................... $232,608,099
============
Net asset value per common share:
($232,608,099 / 16,707,093 shares of
common stock issued and outstanding) ......................... $13.92
======
(Right column)
- --------------------------------------------------------------------------------
The BlackRock Investment
Quality Municipal Trust Inc.
Statement of Operations
Six Months Ended April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Net Investment Income
Income
Interest and discount earned ................................... $10,316,258
-----------
Expenses
Investment advisory ............................................ 649,240
Administration ................................................. 278,246
Auction agent .................................................. 162,000
Reports to shareholders ........................................ 46,000
Custodian ...................................................... 44,000
Directors ...................................................... 24,000
Audit .......................................................... 18,000
Transfer agent ................................................. 12,000
Legal .......................................................... 4,000
Miscellaneous .................................................. 88,402
-----------
Total expenses ................................................. 1,325,888
-----------
Net investment income ............................................ 8,990,370
-----------
Realized and Unrealized Gain (Loss) on
Investments (Note 3)
Net realized gain on investments ................................. 4,671,282
Net change in unrealized appreciation
(depreciation) on investments .................................. (8,810,173)
-----------
Net loss on investments .......................................... (4,138,891)
-----------
Net Increase in Net Investment Assets
Resulting from Operations ...................................... $ 4,851,479
===========
See Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
The BlackRock Investment
Quality Municipal Trust Inc.
Statements of Changes in
Net Investment Assets (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
April 30, October 31,
Increase (Decrease) in Net Investment Assets 1996 1995
---- ----
<S> <C> <C>
Operations:
Net investment income ..................................................... $ 8,990,370 $ 18,339,846
Net realized gain on investments .......................................... 4,671,282 4,428,547
Net change in unrealized appreciation (depreciation) on investments ....... (8,810,173) 31,800,161
------------ ------------
Net increase in net investment assets resulting from operations ........... 4,851,479 54,568,554
Dividends and distributions:
To common shareholders from net investment income ......................... (6,578,286) (13,783,161)
To common shareholders in excess of net realized gain on investments ...... (239,692) -
To preferred shareholders from net investment income ...................... (2,326,109) (5,137,617)
To preferred shareholders in excess of net realized gain on investments ... (89,343) -
------------ ------------
(9,233,430) (18,920,778)
------------ ------------
Capital stock transactions:
Additional capital charge with respect to the issuance of shares .......... - (782)
------------ ------------
Total increase (decrease) ............................................. (4,381,951) 35,646,994
Net Investment Assets
Beginning of period ......................................................... 366,990,050 331,343,056
------------ ------------
End of period ............................................................... $362,608,099 $366,990,050
============ ============
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
The BlackRock Investment
Quality Municipal Trust Inc.
Financial Highlights (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Period
Ended
Six Months February 26,
Ended Year Ended October 31, 1993*
April 30, ---------------------- to October 31,
PER COMMON SHARE OPERATING PERFORMANCE: 1996 1995 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value, beginning of period ............................ $ 14.18 $ 12.05 $ 14.76 $ 14.10
-------- -------- -------- --------
Net investment income ......................................... 0.54 1.10 1.06 0.66
Net realized and unrealized gain (loss) on investments ........ (0.25) 2.16 (2.64) 0.74
-------- -------- -------- --------
Net increase (decrease) from investment operations .............. 0.29 3.26 (1.58) 1.40
-------- -------- -------- --------
Dividends and Distributions:
Dividends from net investment income to:
Common shareholders ......................................... (0.39) (0.82) (0.90) (0.45)
Preferred shareholders ...................................... (0.14) (0.31) (0.21) (0.11)
Distributions in excess of net realized gain on investments to:
Common shareholders ......................................... (0.01) - - -
Preferred shareholders ...................................... (0.01) - - -
-------- -------- -------- --------
Total dividends and distributions ......................... (0.55) (1.13) (1.11) (0.56)
-------- -------- -------- --------
Capital charge with respect to issuance of shares ............. - - (0.02) (0.18)
-------- -------- -------- --------
Net asset value, end of period** ................................ $ 13.92 $ 14.18 $ 12.05 $ 14.76#
======== ======== ======== ========
Market value, end of period** ................................... $ 12.25 $ 12.00 $ 10.375 $ 14.125
======== ======== ======== ========
TOTAL INVESTMENT RETURN+ ........................................ 5.34% 24.01% (20.98%) 3.36%
======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS OF COMMON SHAREHOLDERS:+++
Expenses ........................................................ 1.11%++ 1.16% 1.14% 1.04%++
Net investment income ........................................... 7.50%++ 8.36% 7.80% 6.86%++
SUPPLEMENTAL DATA:
Average net assets of common shareholders (in thousands) ........ $240,955 $219,740 $226,935 $236,810
Portfolio turnover .............................................. 77% 182% 210% 110%
Net assets of common shareholders, end of period (in thousands) . $232,608 $236,990 $201,343 $246,631
Preferred stock outstanding (in thousands) ...................... $130,000 $130,000 $130,000 $130,000
Asset coverage per share of preferred stock, end of period ...... $ 69,732 $ 70,575 $127,440 $144,858
<FN>
* Commencement of investment operations.
** Net asset value and market value are published in The Wall Street Journal
each Monday.
# Net asset value immediately after the closing of the first public offering
was $14.05.
+ Total investment return is calculated assuming a purchase of common stock at
the current market price on the first day and a sale at the current market
price on the last day of the period reported. Dividends and distributions,
if any, are assumed for purposes of this calculation, to be reinvested at
prices obtained under the Trust's dividend reinvestment plan. Total
investment return does not reflect brokerage commissions. Total investment
returns for periods of less than one year are not annualized.
++ Annualized.
+++ Ratios are calculated on the basis of income and expenses applicable to both
the common and preferred stock relative to the average net assets of common
shareholders. Ratios do not reflect the effect of dividend payments to
preferred shareholders.
Contained above is unaudited operating performance for a share of common stock
outstanding, total investment return, ratios to average net assets and other
supplemental data for the periods indicated. This information has been
determined based upon financial information provided in the financial statements
and market value data for the Trust's shares.
</FN>
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
(Left column)
- --------------------------------------------------------------------------------
The BlackRock Investment
Quality Municipal Trust Inc.
Notes to Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
Note 1. Accounting The BlackRock Investment Quality Municipal Trust Inc. (the
Policies "Trust") was organized in Maryland on November 19, 1992 as
a diversified, closed-end management investment company.
The Trust had no transactions until February 16, 1993 when it sold 7,093 shares
of common stock for $100,012 to BlackRock Financial Management, Inc. (the
"Adviser"). Investment operations commenced on February 26, 1993.
The Trust's investment objective is to manage a diversified portfolio of
investment-grade securities to achieve high current income exempt from regular
Federal income tax consistent with the preservation of capital. The ability of
issuers of debt securities held by the Trust to meet their obligations may be
affected by economic developments in a specific industry or region. No assurance
can be given that the Trust's investment objective will be achieved.
The following is a summary of significant accounting policies followed by
the Trust.
Securities Valuation: Municipal securities (including commitments to purchase
such securities on a "when-issued" basis) are valued on the basis of prices
provided by a pricing service which uses information with respect to
transactions in bonds, quotations from bond dealers, market transactions in
comparable securities and various relationships between securities in
determining values. Any securities or other assets for which such current market
quotations are not readily available are valued at fair value as determined in
good faith under procedures established by and under the general supervision and
responsibility of the Trust's Board of Directors.
Short-term securities which mature in more than 60 days are valued at
current market quotations. Short-term securities which mature in 60 days or less
are valued at amortized cost, if their term to maturity from date of purchase is
60 days or less, or by amortizing their value on the 61st day prior to maturity,
if their original term to maturity from date of purchase exceeded 60 days.
Option Selling/Purchasing: When the Trust sells or purchases an option, an
amount equal to the premium received or paid by the Trust is recorded as a
liability or an asset and is subsequently adjusted to the current market value
of the
option written or purchased. Premiums received or paid from writing or
purchasing options which expire unexercised are treated by the Trust on the
expiration date as realized gains or losses. The difference between the premium
and the amount paid or received on effecting a closing
(Right column)
purchase or sale transaction, including brokerage commissions, is also treated
as a realized gain or loss. If an option is exercised, the premium paid or
received is added to the proceeds from the sale or cost of the purchase in
determining whether the Trust has realized a gain or a loss on investment
transactions. The Trust, as writer of an option, may have no control over
whether the underlying securities may be sold (call) or purchased (put) and as a
result bears the market risk of an unfavorable change in the price of the
security underlying the written option.
Financial Futures Contracts: A futures contract is an agreement between two
parties to buy and sell a financial instrument for a set price on a future date.
Initial margin deposits are made upon entering into futures contracts and can be
either cash or securities. During the period the futures contract is open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking-to-market" on a daily basis to reflect the market value of
the contract at the end of each day's trading. Variation margin payments are
made or received, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Trust records a realized gain or loss
equal to the difference between the proceeds from (or cost of) the closing
transaction and the Trust's basis in the contract.
Financial futures contracts, when used by the Trust, help in maintaining a
targeted duration. Duration is a measure of the price sensitivity of a security
or a portfolio to relative changes in interest rates. For instance, a duration
of "one" means that a portfolio's or a security's price would be expected to
change by approximately one percent with a one percent change in interest rates,
while a duration of "five" would imply that the price would move approximately
five percent in relation to a one percent change in interest rates. Futures
contracts can be sold to effectively shorten an otherwise longer duration
portfolio. In the same sense, futures contracts can be purchased to lengthen a
portfolio that is shorter than its duration target. Thus, by buying or selling
futures contracts, the Trust can effectively "hedge" more volatile positions so
that changes in interest rates do not change the duration of the portfolio
unexpectedly.
The Trust may invest in financial futures contracts primarily for the
purpose of hedging its existing portfolio securities or securities the Trust
intends to purchase against fluctuations in value caused by changes in
prevailing market interest rates. Should interest rates move unexpectedly, the
Trust may not achieve the anticipated benefits of the financial futures
contracts and may realize a loss. The use of futures transactions involves the
risk of imperfect correlation in movements in the price of futures contracts,
interest rates and the underlying hedged assets.
Short Sales: The Trust may make short sales of securities as a method of hedging
potential declines in similar securities owned. When the Trust makes a short
sale, it may borrow the security sold short and deliver it to the broker-dealer
11
<PAGE>
(Left column)
through which it made the short sale as collateral for its obligation to deliver
the security upon conclusion of the sale. The Trust may have to pay a fee to
borrow the particular securities and may be obligated to pay over any payments
received on such borrowed securities. A gain, limited to the price at which the
Trust sold the security short, or a loss, unlimited as to dollar amount, will be
recognized upon the termination of a short sale if the market price is greater
or less than the proceeds originally received.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses are calculated on the
identified cost basis. Interest income is recorded on the accrual basis and the
Trust amortizes premium and accretes original issue discount on securities
purchased using the interest method.
Federal Income Taxes: It is the Trust's intention to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute sufficient net income to shareholders. For this
reason and because substantially all of the Trust's gross income consists of
tax-exempt interest, no Federal income tax provision is required.
Dividends and Distributions: The Trust declares and pays dividends and
distributions to common shareholders monthly from net investment income, net
realized short-term capital gains and other sources, if necessary. Net long-term
capital gains, if any, in excess of loss carryforwards may be distributed
annually. Dividends and distributions are recorded on the ex-dividend date.
Dividends and distributions to preferred shareholders are accrued and determined
as described in Note 4.
Deferred Organization Expenses: A total of $65,000 was incurred in connection
with the organization of the Trust. These costs have been deferred and are being
amortized ratably over a period of sixty months from the date the Trust
commenced investment operations.
Reclassification of Capital Accounts: Effective January 1, 1994, the Trust began
accounting and reporting for permanent differences between financial and tax
reporting in accordance with the American Institute of Certified Public
Accountants' Statement of Position 93-2: Determination, Disclosure and Financial
Statement Presentation of Income, Capital Gain and Return of Capital
Distributions by Investment Companies. The effect of adopting the statement for
the six months ended April 30, 1996 was to increase accumulated net realized
loss and increase undistributed net investment income by $44,488. Net investment
income, net realized gains and net assets were not affected by this change.
Note 2. Agreements The Trust has an Investment Advisory Agreement with
(Right column)
the Adviser and an Administration Agreement with Princeton
Administrators L.P. (the "Administrator"), an indirect wholly owned-subsidiary
of Merrill Lynch & Co., Inc.
The investment fee paid to the Adviser is computed weekly and payable
monthly at an annual rate of 0.35% of the Trust's average weekly net investment
assets. The administration fee paid to the Administrator is also computed weekly
and payable monthly at an annual rate of 0.15% of the Trust's average weekly net
investment assets.
Pursuant to the agreements, the Adviser provides continuous supervision of
the investment portfolio and pays the compensation of officers of the Trust who
are affiliated persons of the Adviser. The Administrator pays occupancy and
certain clerical and accounting costs of the Trust. The Trust bears all other
costs and expenses.
On February 28, 1995, the Adviser was acquired by PNC Bank, N.A. Following
the acquisition, the Adviser has become a wholly-owned corporate subsidiary of
PNC Asset Management Group, Inc., the holding company for PNC's asset management
businesses.
Note 3. Portfolio Purchases and sales of investment securities, other than
Securities short-term investments, for the period ended April 30, 1996,
aggregated $283,933,850 and $292,341,112, respectively.
The federal income tax basis of the Trust's investments at April 30, 1996
was substantially the same as the basis for financial reporting, and
accordingly, net unrealized appreciation was $445,482 (gross unrealized
appreciation-$6,084,433, gross unrealized depreciation-$5,638,951).
For federal income tax purposes, the Trust had a capital loss carryforward
at October 31, 1995 of approximately $5,093,000 which will expire in 2002.
Accordingly, no capital gains distribution is expected to be paid to
shareholders until net gains have been realized in excess of such amount.
Note 4. Capital There are 200 million shares of $.01 par value common stock
authorized. Of the 16,707,093 common shares outstanding at
April 30, 1996, the Adviser owned 7,093 shares. As of April 30, 1996, there were
5,200 shares of preferred stock outstanding as follows: Series T7-2,600 and
Series T8-2,600.
Offering costs ($1,046,346) incurred in connection with the underwriting of
the Trust's common stock have been charged to paid-in capital in excess of par
of the common stock.
12
<PAGE>
(Left column)
The Trust may classify or reclassify any unissued shares of common stock
into one or more series of preferred stock. On April 1, 1993, the Trust
reclassified 2,600 shares of common stock and issued 2 series of Auction Market
Preferred Stock ("Preferred Stock") as follows: Series T7-1,300 shares, Series
T28-1,300 shares. The Preferred Stock had a liquidation value of $50,000 per
share plus any accumulated but unpaid dividends. On May 16, 1995 shareholders
approved a proposal to split each share of the Trust's Auction Market Preferred
Stock into two shares and simultaneously reduce each share's liquidation
preference from $50,000 to $25,000 per share plus any accumulated but unpaid
dividends. The stock split occurred on July 24, 1995.
The underwriting discount ($1,950,000) and offering costs ($328,828)
incurred in connection with the Preferred Stock offering have been charged to
paid-in capital in excess of par of the common stock.
Dividends on Series T7 are cumulative at a rate which is reset every 7 days
based on the results of an auction. Dividends on Series T28 are also cumulative
at a rate which is reset every 28 days based on the results of an auction.
Dividend rates ranged from 3.30% to 5.50% during the six months ended April 30,
1996.
The Trust may not declare dividends or make otherdistributions on shares of
common stock or purchase any such shares if, at the time of the declaration,
distribution, or purchase, asset coverage with respect to the outstanding
Preferred Stock would be less than 200%.
The Preferred Stock is redeemable at the option of the Trust, in whole or in
part, on any dividend payment date at
(Right columm)
$25,000 per share plus any accumulated or unpaid dividends whether or not
declared. The Preferred Stock is also subject to mandatory redemption at $25,000
per share plus any accumulated or unpaid dividends, whether or not declared, if
certain requirements relating to the composition of the assets and liabilities
of the Trust as set forth in the Articles of Incorporation are not satisfied.
The holders of Preferred Stock have voting rights equal to the holders of
common stock (one vote per share) and will vote together with holders of shares
of common stock as a single class. However, holders of Preferred Stock are also
entitled to elect two of the Trust's directors. In addition, the Investment
Company Act of 1940 requires that, along with approval by stockholders that
might otherwise be required, the approval of the holders of a majority of any
outstanding preferred shares, voting separately as a class would be required to
(a) adopt any plan of reorganization that would adversely affect the preferred
shares, and (b) take any action requiring a vote of security holders, including,
among other things, changes in the Trust's subclassification as a closed-end
investment company or changes in its fundamental investment restrictions.
Note 5. Dividends Subsequent to April 30, 1996, the Board of Directors of the
and Distributions Trust declared a dividend from undistributed earnings of
$0.0656 per common share payable May 31, 1996 to
shareholders of record on May 15, 1996.
For the period May 1, 1996 through May 31, 1996, dividends declared on
Preferred Stock totalled $405,475 in aggregate for the two outstanding Preferred
Stock series.
Note 6. Quarterly Data
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase/
Net realized and decrease in
unrealized net investment
Net investment gains (losses) assets resulting Dividends and distributions
income on investments from operations Common shares Preferred shares* Period
Per Per Per Per Per Share price of end
Quarterly Total Common Common Common Common Common Common stock net asset
period income Amount share Amount share Amount share Amount share Amount share High Low value
--------- ------ -------------- -------------- ---------------- -------------- ------------ -------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
November 1,
1993 to
January 31,
1994 $5,029,133 $4,393,508 $0.26 $ 3,889,764 $0.23 $ 8,283,272 $0.49 $3,759,096 $0.23 $ 776,163 $.05 $14.50 $13.00 $14.99
February 1,
1994 to
April 30,
1994 5,158,071 4,551,640 0.27 (32,246,232)(1.92)(27,694,592)(1.65) 3,759,096 0.23 754,441 0.04 14.00 11.625 13.04
May 1,
1994 to
July 31,
1994 4,963,953 4,280,193 0.26 4,049,327 0.24 8,329,520 0.50 3,759,025 0.22 957,960 0.06 12.50 11.750 13.26
August 1,
1994 to
October 31,
1994 5,128,692 4,473,476 0.27 (19,857,823)(1.19)(15,384,347)(0.92) 3,759,051 0.22 1,038,714 0.06 12.00 10.125 12.05
November 1,
1994 to
January 31,
1995 5,167,141 4,505,179 0.27 10,324,567 0.62 14,829,746 0.89 3,759,096 0.22 1,289,763 0.08 11.50 9.750 12.64
February 1,
1995 to
April 30,
1995 5,256,532 4,656,763 0.28 11,243,606 0.67 15,900,369 0.95 3,445,751 0.20 1,276,017 0.08 12.25 11.250 13.31
May 1,
1995 to
July 31,
1995 5,251,803 4,622,475 0.28 5,576,430 0.33 10,198,905 0.61 3,289,160 0.20 1,336,807 0.08 12.25 11.375 13.64
August 1,
1995 to
October 31,
1995 5,200,417 4,555,429 0.27 9,084,105 0.54 13,639,534 0.81 3,289,154 0.20 1,235,030 0.07 12.00 11.375 14.18
November 1,
1995 to
January 31,
1995 5,173,253 4,502,933 0.27 9,286,914 0.56 13,789,847 0.83 3,528,881 0.21 1,310,376 0.08 12.625 11.875 14.72
February 1,
1996 to
April 30,
1996 5,143,005 4,487,437 0.27 (13,425,805)(0.80) (8,938,368)(0.54) 3,289,097 0.19 1,105,076 0.07 13.000 11.875 13.92
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
*For the six months ended April 30, 1996 the average annualized rate paid to
preferred shareholders was 3.73%.
</FN>
</TABLE>
13
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
There have been no material changes in the Trust's investment objectives or
policies that have not been approved by the shareholders, or to its charter or
by-laws, or in the principal risk factors associated with investment in the
Trust. There have been no changes in the persons who are primarily responsible
for the day-to-day management of the Trust's portfolio.
The Annual Meeting of Trust Shareholders was held May 8, 1996 to vote on the
following matters:
(1) To elect three Directors to serve as follows:
Director Class Term Expiring
-------- ----- ---- --------
Andrew F. Brimmer .................... III 3 years 1999
Kent Dixon ........................... III 3 years 1999
Laurence D. Fink ..................... III 3 years 1999
Directors whose term of office continues beyond this meeting are Richard E.
Cavanagh, Frank J. Fabozzi, James Grosfeld, James Clayburn LaForce, Jr. and
Ralph L. Schlosstein.
(2) To ratify the selection of Deloitte & Touche LLP as independent public
accountants of the Trust for the fiscal year ending October 31, 1996.
Shareholders elected the three Directors and ratified the selection of Deloitte
& Touche LLP. The results of the voting was as follows:
Votes for Votes Against Abstentions
--------- ------------- -----------
Andrew F. Brimmer ................... 12,251,153 0 245,790
Kent Dixon .......................... 12,258,932 0 238,011
Laurence D. Fink .................... 12,256,667 0 240,276
Ratification of Deloitte & Touche LLP 12,230,684 0 240,276
- --------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN
- --------------------------------------------------------------------------------
Pursuant to the Trust's Dividend Reinvestment Plan (the "Plan"),
shareholders will automatically have all distributions of dividends and capital
gains reinvested by Boston EquiServe (the "Plan Agent") in Trust shares.
Shareholders who do not participate in the Plan will receive all distributions
in cash paid by check in United States dollars mailed directly to the
shareholders of record (or if the shares are held in street or other nominee
name, then to the nominee) by the transfer agent, as dividend disbursing agent.
The Plan Agent serves as agent for the shareholders in administering the
Plan. After the Trust declares a dividend or determines to make a capital gain
distribution, the Plan Agent will, as agent for the participants, receive the
cash payment and use it to buy Trust shares in the open market on the New York
Stock Exchange for the participants' accounts. The Trust will not issue shares
under the Plan.
Participants in the Plan may withdraw from the Plan upon written notice to
the Plan Agent and will receive certificates for whole Trust shares and a cash
payment for any fraction of a Trust share.
The Plan Agent's fees for the handling of the reinvestment of dividends and
distributions will be paid by the Trust. However, each participant will pay a
pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of dividends
and distributions. The automatic reinvestment of dividends and distributions
will not relieve participants of any federal, state or local income taxes that
may be payable on such dividends or distributions.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Trust reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid subsequent to written notice of the
change sent to all shareholders of the Trust at least 90 days before the record
date for the dividend or distribution. The Plan also may be amended or
terminated by the Plan Agent upon at least 90 days' written notice to all
shareholders of the Trust. All correspondence concerning the Plan should be
directed to the Plan Agent at (800) 699-1BFM. The address is on the front of
this report.
14
<PAGE>
- --------------------------------------------------------------------------------
THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
INVESTMENT SUMMARY
- --------------------------------------------------------------------------------
The Trust's Investment Objective
The BlackRock Investment Quality Municipal Trust's investment objective is to
provide high current income exempt from regular Federal income tax consistent
with the preservation of capital.
Who Manages the Trust?
BlackRock Financial Management, Inc. ("BlackRock" or the "Adviser") is the
investment adviser for the Trust. BlackRock is a registered investment adviser
specializing in fixed income securities. Currently, BlackRock manages over $41
billion of assets across the government, mortgage, corporate and municipal
sectors. These assets are managed on behalf of institutional and individual
investors in 21 closed-end funds traded on either the New York or American Stock
Exchanges, several open-end funds and over 80 separate accounts for various
clients in the U.S. and overseas. BlackRock is a subsidiary of PNC Asset
Management Group which is a division of PNC Bank, N.A., one of the nation's
largest banking organizations.
What Can the Trust Invest In?
Under normal conditions, the Trust expects to continue to manage its assets so
that at least 80% of its investments are rated investment grade ("BBB" by
Standard & Poor's and "Baa" by Moody's Investor Services) and up to 20% of its
assets may instead be deemed to be of equivalent credit quality by the Adviser.
Examples of the types of securities that the Trust may invest in include general
obligation bonds, which are backed by the full taxing power of the municipality
(states, counties and cities), and revenue bonds, which are backed by a revenue
source associated with the issuing municipality or by a special tax. Revenue
bonds include those that are backed by revenues generated by universities,
hospitals, housing developments, utilities, public facilities, toll roads,
airports, etc.
What is the Adviser's Investment Strategy?
The Adviser will manage the assets of the Trust in accordance with the Trust's
investment objective and policies to seek to achieve its objective by investing
in municipal debt securities that are diversified both geographically and
according to revenue source. As such, the Adviser actively manages the assets in
relation to market conditions and interest rate changes. In seeking the
investment objective, the Trust does not expect to invest more than 25% of its
total assets in municipals that are issued by the same state. Depending on yield
and portfolio allocation considerations, the Adviser may choose to invest a
portion of the Trust's assets in securities which pay interest that is subject
to AMT (alternative minimum tax). It is expected that no more than 20% of the
assets of the Trust will be invested in municipals subject to such a tax.
Under current market conditions the use of leverage increases the income earned
by the Trust. The Trust employs leverage primarily through the issuance of
preferred stock. Preferred stockholders will receive dividends based on
short-term rates in exchange for allowing the Trust to borrow additional assets.
These assets will be invested in longer-term assets which typically offer higher
interest rates and the difference between the cost of the dividends paid to
preferred stockholders and the interest earned on the longer-term securities
will provide higher income levels for common stockholders in most interest rate
environments. The Trust issued preferred stock to leverage the portfolio at
approximately 35% of total assets. To protect the common stockholders from
increases in the cost of the preferred stock dividends, the Trust invests in
securities called "additional interest bonds" or "embedded caps", which can help
to limit the risk of increasing costs of leverage in a rising interest rate or
flattening yield curve environment. These bonds pay additional interest when
short-term municipal interest rates rise above a predetermined rate, or "cap".
These securities are used, when available in the marketplace, to attempt to
offset increases in the interest paid to preferred stockholders and may allow
the Trust to maintain dividend levels to common stockholders in interest rate
environments where the yield curve is either flat or inverted. See "Leverage
Considerations in the Trust" below.
How Are the Trust's Shares Purchased and Sold? Does the Trust Pay Dividends
Regularly?
The Trust's shares are traded on the New York Stock Exchange which provides
investors with liquidity on a daily basis. Orders to buy or sell shares of the
Trust must be placed through a registered broker or financial advisor. The Trust
pays monthly dividends which are typically paid on the last business day of the
month. For shares held in the shareholder's name, dividends may be reinvested in
additional
15
<PAGE>
shares of the fund through the Trust's transfer agent, Boston EquiServe.
Investors who wish to hold shares in a brokerage account should check with their
financial advisor to determine whether their brokerage firm offers dividend
reinvestment services.
Leverage Considerations in the Trust
Leverage increases the duration (or price sensitivity of the net assets with
respect to changes in interest rates) of the Trust, which can improve the
performance of the Trust in a declining rate environment, but can cause net
assets to decline faster in a rapidly rising interest rate environment. The
Trust may reduce, or unwind, the amount of leverage employed should BlackRock
consider that reduction to be in the best interests of the Trust. BlackRock's
portfolio managers continuously monitor and regularly review the Trust's use of
leverage and maintain the ability to unwind the leverage if that course is
chosen. As mentioned above, the Trust will attempt to maintain a percentage of
its investments in additional interest bonds which may help protect the Trust's
income from increases in the cost of leverage.
Special Considerations and Risk Factors Relevant to the Trust
The Trust is intended to be a long-term investment and is not a short-term
trading vehicle.
Investment Objective. Although the objective of the Trust is to provide high
current income exempt from regular Federal income tax consistent with the
preservation of capital, there can be no assurance that this objective will be
achieved.
Dividend Considerations. The income and dividends paid by the Trust are likely
to vary over time as fixed income market conditions change. Future dividends may
be higher or lower than the dividend the Trust is currently paying.
Leverage. The Trust utilizes leverage through preferred stock, which involves
special risks. The Trust's net asset value and market value may be more volatile
due to its use of leverage.
Market Price of Shares. The shares of closed-end investment companies such as
the Trust trade on the New York Stock Exchange (NYSE symbol: BKN) and as such
are subject to supply and demand influences. As a result, shares may trade at a
discount or a premium to their net asset value.
Investment Grade Municipal Obligations. The value of municipal debt securities
generally varies inversely with changes in prevailing market interest rates.
Depending on the amount of call protection that the securities in the Trust
have, the Trust may be subject to certain reinvestment risks in environments of
declining interest rates.
Illiquid Securities. The Trust may invest in securities that are illiquid,
although under current market conditions the Trust expects to do so to only a
limited extent. These securities involve special risks.
Antitakeover Provisions. Certain antitakeover provisions will make a change in
the Trust's business or management more difficult without the approval of the
Trust's Board of Directors and may have the effect of depriving shareholders of
an opportunity to sell their shares at a premium above the prevailing market
price.
16
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THE BLACKROCK INVESTMENT QUALITY MUNICIPAL TRUST INC.
GLOSSARY
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Closed-End Fund: Investment vehicle which initially offers a fixed
number of shares and trades on a stock exchange. The
fund invests in a portfolio of securities in accordance
with its stated investment objectives and policies.
Discount: When a fund's net asset value is greater than its stock
price the fund is said to be trading at a discount.
Dividend: Income generated by securities in a portfolio and
distributed to shareholders after the deduction of
expenses. This Trust declares and pays dividends to
common shareholders on a monthly basis.
Dividend Reinvestment: Shareholders may elect to have all dividends and
distributions of capital gains automatically reinvested
into additional shares of the Trust.
Embedded Cap Bonds: Also known as additional interest municipal bonds.
These securities are intended to protect the income
that a fund earns through leverage from significant
increases in short-term rates. The coupon on these
bonds will increase if short term rates rise
significantly.
Market Price: Price per share of a security trading in the secondary
market. For a closed-end fund, this is the price at
which one share of the fund trades on the stock
exchange. If you were to buy or sell shares, you would
pay or receive the market price.
Net Asset Value (NAV): Net asset value is the total market value of all
securities and other assets held by the Trust, plus
income accrued on its investments, minus any
liabilities including accrued expenses, divided by the
total number of outstanding shares. It is the
underlying value of a single share on a given day. Net
asset value for the Trust is calculated weekly and
published in Barron's on Saturday and The New York
Times or The Wall Street Journal each Monday.
Premium: When a fund's stock price is greater than its net asset
value, the fund is said to be trading at a premium.
17
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BLACKROCK FINANCIAL MANAGEMENT, INC.
AN OVERVIEW
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BlackRock Financial Management (BlackRock) is a registered investment
adviser which specializes in managing high quality fixed income securities, both
taxable and tax exempt. BlackRock currently manages over $41 billion of assets
across the government, mortgage, corporate and municipal sectors. These assets
are managed on behalf of many individual investors in twenty-one closed-end
funds traded on either the New York or American stock exchanges, and several
open-end funds and on behalf of more than 80 institutional clients in the United
States and overseas. BlackRock's institutional investor base includes Chrysler
Corporation Master Retirement Trust, General Retirement System of the City of
Detroit, State Treasurer of Florida, Ford Motor Company Pension Plan, General
Electric Pension Trust and Unisys Corporation Master Trust.
BlackRock was formed in April 1988 by fixed income professionals who sought
to create an asset management firm specializing in managing fixed income
securities for individuals and institutional investors. The professionals at
BlackRock have extensive experience creating, analyzing and trading a variety of
fixed income instruments, including the most complex structured securities. In
fact, individuals at BlackRock are responsible for many of the major innovations
in the mortgage-backed and asset-backed securities markets, including the
creation of the CMO, the floating rate CMO, the senior/subordinated pass-through
and the multi-class asset-backed security.
BlackRock is unique among asset management and advisory firms in the
significant emphasis it places on the development of proprietary analytical
capabilities. A quarter of the professionals at BlackRock work full-time in the
design, maintenance and use of such systems which are otherwise not generally
available to investors. BlackRock's proprietary analytical tools are used for
evaluating, investing in and designing investment strategies and portfolios of
fixed income securities, including mortgage securities, corporate debt
securities or tax-exempt securities and a variety of hedging instruments.
BlackRock has developed investment products which respond to investors'
needs and has been responsible for several major innovations in closed-end
funds. BlackRock introduced the first closed-end mortgage fund, the first
taxable and tax-exempt closed-end funds to offer a finite term, the first
closed-end fund to achieve a AAAf rating by Standard & Poor's, and the first
closed-end fund to invest primarily in North American Government securities.
BlackRock's closed-end funds currently have dividend reinvestment plans which
are designed to provide an ongoing source of demand for the stock in the
secondary market. BlackRock manages a ladder of alternative investment vehicles,
with each fund having specific investment objectives and policies.
In view of our continued desire to provide a high level of service to all
our shareholders, BlackRock maintains a toll-free number for your questions. The
number is (800) 227-7BFM (7236). We encourage you to call us with any questions
you may have about your BlackRock funds and thank you for the continued trust
you place in our abilities.
If you would like further information
please do not hesitate to call BlackRock at (800) 227-7BFM
18
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(Left column)
BlackRock
Directors
Laurence D. Fink, Chairman
Andrew F. Brimmer
Richard E. Cavanagh
Kent Dixon
Frank J. Fabozzi
James Grosfeld
James Clayburn La Force, Jr.
Ralph L. Schlosstein
Officers
Ralph L. Schlosstein, President
Keith T. Anderson, Vice President
Michael C. Huebsch, Vice President
Robert S. Kapito, Vice President
Kevin Klingert, Vice President
Richard M. Shea, Vice President/Tax
Henry Gabbay, Treasurer
James Kong, Assistant Treasurer
Karen H. Sabath, Secretary
Investment Adviser
BlackRock Financial Management, Inc.
345 Park Avenue
New York, NY 10154
(800) 227-7BFM
Administrator
Princeton Administrators L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
(800) 688-0928
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Boston EquiServe L.P.
150 Royall Street
Canton, MA 02021
(800) 699-1BFM
Auction Agent
Bankers Trust Company
4 Albany Street
New York, NY 10006
Independent Auditors
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281-1434
Legal Counsel
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
The accompanying financial statements as of April 30, 1996 were not audited
and, accordingly, no opinion is expressed on them.
This report is for shareholder information. This is not a prospectus intended
for use in the purchase or sale of any securities.
The BlackRock Investment Quality Municipal Trust Inc.
c/o Princeton Administrators L.P.
P.O. Box 9095
Princeton, NJ 08543-9095
(800) 227-7BFM
09247D-105
09247D-204
09247D-303
(Right column)
The BlackRock
Investment Quality
Municipal Trust Inc.
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Semi-Annual Report
April 30, 1996
